The great sucking sound you hear…wages…
Is it just me or are wages in the United States among the working stiffs going in the wrong direction?
Circuit City announced this week it was firing 3,400 workers who the company considers to be high-wage earners and replace them with people than make less money. (Check out my analysis on this at MSNBC.com.) And a flurry of recent union contracts have ended with major concessions on wages, one of the biggest trends being new employees would make substantially less starting out than workers before them.
Here are some interesting facts from Peter S. Cohan, a management consultant from Massachusetts:
This decade has featured record debt levels, extreme income inequality not seen since 1928 — according to the New York Times in 2005 the top 1% (over $348,000 in income) took home 21.8% — their largest share of national income since 1928, and a negative savings rate of -0.7% — last seen in 1933 — the depths of the Great Depression.
Another group in the top 0.01% are CEOs who send lower paying jobs overseas to maximize their business profits and boost their incomes. According to the Wall Street Journal, Princeton University economist Alan Blinder estimates that 30 million to 40 million jobs could be sent overseas due to globalization. For those American workers whose jobs are offshored, it could be harder to pay their bills. But the bosses who send the jobs overseas should be just fine.
Are workers doing just fine?
March 30th, 2007 at 3:35 pm
Firing all those employees was not smart. CC is going to have huge turnover, no employee loyalty, customer dissatisfaction and bad PR. It’s very short term thinking…but that’s probably why CC got into financial trouble in the first place.
March 30th, 2007 at 3:55 pm
you might be onto something.
April 5th, 2007 at 8:41 am
This certainly hits close to home. About 3 years ago I was working for a leading family owned corporation that had been in business for 60 years. We hired some ambitious sales people who made promises to the owner/president of the company that “we” would greatly increase our sales.Instead of working with a “all for one,one for all” attitude we would break up the company into divisions. These divisions would then become customers of the other divisions and create competition within our own company.
We adopted this reorganization.
About 2 years later we had taken in some new clients which required additional labor. I was the person respondsible for filling the labor needs. The economy had changed and now the salaries had escalated about 10%. The company answer was to freeze pay increases for employees with greater than 5 years with the company. This was not recieved by the employees very well. We lost approx .18% of my experienced work force. When I approached the Vice President of the company his response was simply, “Well, we are cutting our labor cost and besides,we don’t want anyone here long enough to get the golden watch. We can hire new people cheaper than keep our experienced ones. Let them leave.”
I left the company 6 months later after my discussion. As a result of my exit interview, I would guess that my personnel file is stamped “do not rehire”.!
April 5th, 2007 at 8:54 am
that is an amazing story. and i can’t believe he actually said he didn’t “want anyone here long enough to get the golden watch.” what are these people thinking?